FINDLAY, Ohio & DENVER–(BUSINESS WIRE)–MPLX LP (NYSE: MPLX) and MarkWest Energy Partners, L.P. (NYSE: MWE) (MarkWest) today announced that in connection with the merger of MPLX and MarkWest, MPLX has agreed to increase the amount of the cash consideration payable to MarkWest common unitholders by $400 million, from $675 million to $1.075 billion. Under the revised terms of the merger agreement, MarkWest common unitholders will receive 1.09 MPLX common units plus a one-time cash payment of approximately $5.21 per MarkWest common unit, for a total consideration of approximately $52.93 per MarkWest common unit, based on fully diluted units currently outstanding and the closing price of MPLX’s common units on Nov. 10, 2015. The increase in cash merger consideration is being contributed to MPLX by its sponsor, Marathon Petroleum Corporation (NYSE: MPC), under which no new equity units will be issued to MPC. In addition, as part of the original transaction, MPC will contribute approximately $225 million, based on the price of MPLX’s common units on Nov. 10, 2015, to maintain its 2 percent general partner interest in MPLX. These proceeds will be retained by the partnership to support its growth.
All other terms of the merger agreement announced on July 13, 2015, remain the same. The merger is recommended by the boards of directors of MPC, MPLX and MarkWest, and the executive management of both partnerships also strongly support the transaction and its revised terms.
The proposed transaction will combine MarkWest, the second-largest processor of natural gas in the United States and largest processor and fractionator in the Marcellus and Utica shale plays, with MPLX, a rapidly growing crude oil and refined products logistics partnership sponsored by MPC. The combination will create one of the largest master limited partnerships (MLPs) and is expected to generate a mid-20 percent compound annual distribution growth rate through 2019.
“The enhancement to the terms of our agreement reflects the commitment of MPLX and its sponsor, MPC, to the combination with MarkWest and our conviction that the transaction will create significant benefits for the unitholders, customers and employees of both partnerships,” said Gary R. Heminger, MPLX chairman and chief executive officer. “This increase substantially enhances the transaction value for MarkWest unitholders, who will not only benefit from significant distribution growth, but also a substantially lower equity yield, investment-grade debt funding costs, enhanced access to capital and liquidity, and a strong general partner prepared to provide support and financial flexibility.”
Even in a challenging environment of lower MLP valuations and higher yields, and in continued support of the combination, MPLX recently affirmed its guidance that creates a mid-20 percent compound annual distribution growth profile through 2019, including a 25 percent distribution growth rate in 2016. Heminger noted that MPC, as the sponsor and general partner, has extensive options available to support the growth profile of the combined partnership, including dropping down the large and growing $1.6 billion inventory of MLP-qualifying earnings before interest, taxes, depreciation and amortization.
“The increased cash consideration and ownership of a higher growth MLP with a strong sponsor provides even more compelling value for MarkWest unitholders, who will own approximately 73 percent of the combined partnership when the transaction is completed,” said Heminger. “Both partnerships’ unitholders can share in the strong upside potential of a combined partnership with multiple operational platforms as well as significant growth and commercial synergy opportunities. Coupled with MarkWest’s $1.5 billion average annual organic capital growth program over the next five years, our substantial resources and strong sponsor will support the combined partnership in unlocking an incremental $6 billion to $9 billion of potential organic growth projects,” said Heminger.
“Our Board continues to support the combination with MPLX and recommends that MarkWest unitholders vote in favor of the merger proposal,” said Frank M. Semple, MarkWest chairman, president and chief executive officer. “The long-term strategic value of the combination with MPLX and the support from Marathon Petroleum is compelling. The increased cash contribution of $400 million substantially enhances the value of the transaction for our unitholders. We are excited to complete the transaction and continue the important work of developing critical midstream projects for our producer customers, and delivering significant unitholder value over the long term.”
The transaction is subject to approval by MarkWest unitholders and other customary closing conditions and, subject to the satisfaction of those conditions, is expected to close in December 2015. The date of the special meeting of MarkWest common unitholders is Dec. 1, 2015. MarkWest unitholders of record as of Oct. 5, 2015, will be entitled to vote on approval of the merger and the associated proposals.
MarkWest unitholders are urged to vote “FOR” the merger and related matters and submit their proxy as promptly as possible, either by telephone, via the internet or by marking, signing and dating the proxy card that was provided to unitholders along with the proxy statement and prospectus.
MarkWest expects to mail supplemental proxy materials to its unitholders in the near future.
About MPLX LP
MPLX is a fee-based, growth-oriented master limited partnership formed in 2012 by Marathon Petroleum Corporation to own, operate, develop and acquire pipelines and other midstream assets related to the transportation and storage of crude oil, refined products and other hydrocarbon-based products. Headquartered in Findlay, Ohio, MPLX’s assets consist of a 99.5 percent equity interest in a network of common carrier crude oil and products pipeline assets located in the Midwest and Gulf Coast regions of the United States and a 100 percent interest in a butane storage cavern located in West Virginia with approximately 1 million barrels of natural gas liquids storage capacity.
About MarkWest Energy Partners
MarkWest Energy Partners, L.P. is a master limited partnership that owns and operates midstream service businesses. MarkWest has a leading presence in many natural gas resource plays including the Marcellus Shale, Utica Shale, Huron/Berea Shale, Haynesville Shale, Woodford Shale and Granite Wash formation.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed acquisition of MWE by MPLX. In connection with the proposed acquisition, MWE and MPLX have filed relevant materials with the SEC, including MPLX’s registration statement on Form S-4 that includes a definitive joint proxy statement and a prospectus and was declared effective by the SEC on October 29, 2015. Investors and security holders are urged to read all relevant documents filed with the SEC, including the definitive joint proxy statement and prospectus, because they contain important information about the proposed transaction. Investors and security holders are able to obtain the documents free of charge at the SEC’s website, http://www.sec.gov, or for free from MPLX LP at its website, http://ir.mplx.com, or in writing at 200 E. Hardin Street, Findlay, Ohio 45840, Attention: Corporate Secretary, or for free from MWE by contacting Investor Relations by phone at 1-(866) 858-0482 or by email at [email protected]
Participants in the Solicitation
This communication is not a solicitation of a proxy from any investor or securityholder. However MPLX and MWE and their respective directors and executive officers and certain employees may be deemed to be participants in the solicitation of proxies from the holders of MWE common units with respect to the proposed transaction. Information about MPLX’s directors and executive officers is available in MPLX’s Annual Report on Form 10-K filed with the SEC on February 27, 2015 and MPLX’s current report on Form 8-K, as filed with the SEC on March 9, 2015. Information about MWE’s directors and executive officers is set forth in the proxy statement for MWE’s 2015 Annual Meeting of Common Unitholders, which was filed with the SEC on April 23, 2015 and MWE’s current reports on Form 8-K, as filed with the SEC on May 5, 2015, May 19, 2015 and June 8, 2015, and in the definitive joint proxy statement filed by MPLX, which was declared effective by the SEC on October 29, 2015. To the extent holdings of MWE securities have changed since the amounts contained in the definitive joint proxy statement filed by MPLX, which was declared effective by the SEC on October 29, 2015, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Investors may obtain additional information regarding the interest of such participants by reading the definitive joint proxy statement and prospectus regarding the acquisition. These documents may be obtained free of charge from the SEC’s website http://www.sec.gov, or from MWE and MPLX using the contact information above.
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.